W-8BEN treaty rate withholding calculator.

Worked example

Worked example. A US$10,000 payment of U.S.-source income to a foreign person with no treaty claim is withheld at 30%: 3,000.00 withheld, 7,000.00 paid. If a treaty article gives 10% for that income type, 1,000.00 is withheld and 9,000.00 is paid, saving 2,000.00. The 10% is an example input only.

How it works

The default. The IRS instructions for Form W-8BEN say foreign persons are subject to U.S. tax at 30% on income from U.S. sources, generally collected by withholding. The treaty. If your country of residence has an income tax treaty with the U.S., the treaty can reduce the rate or exempt the income. The rate depends on the treaty and the type of income, so read it from the IRS tables rather than guessing: Table 1 for interest, dividends, royalties, pensions and similar income, and Table 2 for compensation for personal services performed in the United States.

Where the work is done matters. The IRS states that the source of earned income is the place where the services are performed, so income for work done entirely outside the U.S. is generally not U.S.-source. That is why the first choice above can show zero withholding. A payer may still ask you for a Form W-8BEN, which is how a foreign person documents foreign status, so a request for the form does not by itself mean tax will be withheld.

On the form. Line 9 is the country where you claim to be a resident for treaty purposes. Line 10 is used only for treaty claims that need conditions beyond the usual ones, such as business profits not attributable to a permanent establishment. For treaty claims you generally need a tax identifying number on the form; the instructions say an ITIN is generally required if you do not provide a TIN, with listed exceptions. A Form W-8BEN generally stays valid until the end of the third calendar year after the year you sign it, unless your circumstances change.

The IRS notes that its treaty tables are not a complete guide to every treaty provision. Read the treaty article and ask the payer or a tax adviser if your case has any wrinkle, such as a permanent establishment or a limitation-on-benefits clause. This page does not tell you whether you qualify, and it does not look up a treaty rate.

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FAQ

What is the withholding rate for a foreign person paid from the U.S.?

The IRS instructions for Form W-8BEN give 30% on U.S.-source income of foreign persons, generally collected by withholding. A tax treaty can reduce it.

Where do I find my W-8BEN treaty rate?

In the IRS Tax Treaty Tables. Table 1 covers interest, dividends, royalties, pensions and similar income by country; Table 2 covers compensation for personal services performed in the U.S. Read the treaty article for any conditions.

Do I need a W-8BEN if I work for a U.S. client from abroad?

A payer may ask for one to document that you are a foreign person. The IRS treats income for services performed outside the U.S. as foreign-source, but the form request and how the payer applies it are between you and the payer. Check with them and a tax adviser.

How long does a W-8BEN last?

Generally until the last day of the third calendar year after the year you sign it, unless your circumstances change and make the information wrong.